1 Hardr. 420.
2 Crane t. Price, 35 N. Y. 494 (1866).
3 Stockwell v. Holmes, 33 N. Y. 53 (1865).
1 Scott y. Lloyd, 9 Peters, 418, 445; Bank of U. S. v. Waggener, 9 Peters, 400; Lloyd v. Scott, 4 Peters, 224; Douglass v. McChesney, 2 Rand. 109; Chesterfield v. Jansen, 1 Wils. 292; Lowe v. Waller, 2 Doug. 736; Comyn on Usury, sect. 8, p. 94; Davis v, Hardacre, 2 Camp. 375; Agricultural Bank v. Bissell, 12 Pick. 586.
2 Tyson v. Rickard, 3 Har. & J. 109.
3 Barker v. Vansommer, 1 Bro. C. C. 151. In this case the Lord Chancellor said: "It is argued by one gentleman that this was a mere sale, that, therefore, the court cannot look into it. I allow that, if this was in the common course of trade, it would be so. That was the reason upon which the Court of Exchequer refused relief in the Duke of Ancaster's case. But I am to inquire whether, under the mask of trading, this is not a method of lending money at an extraordinary rate of interest. There is no doubt that if they had talked of this as a loan of money, there would have been an end of the case. The question, then, is only whether there is any method of to exact money held by another person at the time at which it is due upon an express or implied agreement that more than legal interest shall be paid, is treated as an usurious loan.1
§ 725. In all such cases, where the usury does not appear on the face of the contract, the question whether the contract is a bond fide sale, or merely a cover for a loan, is for a jury to decide, in view of the circumstances of the case. And if they find that it is essentially a loan, it will be void for usury.2 The mere fact, however, that goods are advanced to enable a person to raise money upon them, creates of itself a presumption that the transaction is usurious,3 unless the circumstances indicate a willingness on the part of the person to whom they are advanced, to take them, and an expectation on his part of making a profit thereby.4 Although, however, such a contract cannot be recovered upon, yet, if goods be advanced, the person to whom they are advanced is liable for the sum which they actually bring, but not for their value at the time of the transaction; for the person advancing them knows that they showing the court that they meant so, short of their treating of it as such, in plain language. There is not a doubt that, in this case, the transaction was merely for the purpose of raising money, to supply the necessities of this young man. Do they deny knowing the goods were to be sold? I take it, therefore, as an advancement of goods, instead of money, to supply his necessities. It is a question of more difficulty, what is the sum, of which the account is to be taken, whether the value of the goods, or the sum really made. In the case in Eq. Abr. 91, the court thought proper to charge the person only with what he really made of the goods, and this is the proper rule; for the person advancing the goods knows that they are not to be sold in the shop, but in the lump, at a different kind of market, and that what can be got for them, in that way, is all that will redound to the benefit of the party to whom they are advanced; this lays out of the case the value they were of, to be sold in the shop."
1 Scott v. Lloyd, 9 Peters, 440; Floyer v. Edwards, 1 Cowp. 113. See Gray v. Belden, 3 Fla. 110; Craig v. Hewitt, 7 B. Monr. 476.
2 Tate v. Wellings, 3 T. R. 535; Train v. Collins, 2 Pick. 145, 152; Scott v. Lloyd, 9 Peters, 445; Stevens v. Davis, 3 Met. 211; Andrews v. Pond, 13 Peters, 65; Thomas v. Catheral, 5 Gill & J. 23; Tregoning v. Attenborough, 7 Bing. 97.
3 Davis v. Hardacre, 2 Camp. 375; Richards v. Brown, 2 Cowp. 770; Rich v. Topping, 1 Esp. 176.
4 Coombe v. Miles, 2 Camp. 553.
are to be sold in a different place, and at once, and that the price they actually bring is all the benefit that the other party will receive from them.1 And, therefore, the law understands the contract to be a sale of goods for such a price as the first vendee shall acquire by a subsequent sale.
§ 726. In the next place, the loan, to be usurious, must be for more than the legal rate of interest. But if the contract be a mere device to secure an illegal rate of interest, it is equally usurious, whatever be its form. Thus, the mere form .of a transfer of goods or stock, or of a discount of notes, or of an annuity, will not make a contract good, which is in substance and intent of the parties an usurious loan.2 If, therefore, a note payable in gold and silver, be taken for the full face of depreciated paper, which is lent, it will constitute usury.3 So, also, if a note be antedated for the purpose of enabling the payee to receive more than legal interest, it is usurious.4 So, also, where money was lent to a brewer, who, in consideration thereof, agreed to pay to the lender a salary as clerk in the brewery, more than equal in amount to the legal interest on the sum lent, it was held to be an usurious contract.5 So, also, if a man lend £100 for a year on legal interest, and at the same time compel the borrower to take a loan of a house at £60 rent, which is not worth £20, the contract is usurious, it being a mere device to evade the statute.6 So, if one agrees, in consideration of obtaining a discount of a note for f 1500 to use only $1000 for his general purposes, and to allow the other $500 to remain on deposit for the payment of the $1500 note when due, this transaction is usurious and void.1 And so, where a bonus is deducted out of the original loan, though six per cent interest only be secured, yet, as the loan is reduced by the bonus, interest on the full sum would be more than six per cent on the actual sum lent, and, therefore, usurious.2 Nor does it make any difference, whether the illegal interest is to be paid in money or in goods; the rule applies in both cases.3
1 Browning v. Morris, 2 Cowp. 792; Pit v. Cholmondeley, 2 Ves. 567; Ex parte Scrivener, 3 Ves. & B. 14; Scott v. Nesbit, 2 Bro. C. C. 641; Barker v. Vansommer, 1 Bro. C. C. 152; Hindle v. O'Brien, 1 Taunt. 413; Smith v. Bromley, 2 Doug. 696; Bond v. Hays, 12 Mass. 34; 1 Story, Eq. Jur. § 298, note, § 301, 302; Ex parte Skip, 2 Ves. 489.